Is China a leading exporter of LNG equipment? 

A question that often comes up in industry conversations, but the answer to it is not as clear-cut as it seems from the outside. Many people immediately imagine giant turnkey plants, but the reality in the segmentLNG equipmentmuch more granular and technically specific. Leadership is not only about the volume of contracts, but also about whose compressor units, cryogenic tanks or control systems are installed at sites from the Arctic to Southeast Asia, and how well they maintain the stated parameters throughout their entire life cycle.

From ?iron? to technology packages

If ten years ago Chinese supplies were associated mainly with auxiliary equipment and metal structures, now the situation is different. We are talking about the transition to the supply of complex units. For example, cryogenic pumps or heat exchangers such asAlfa Laval— their production requires not just precise metalworking, but a deep understanding of the physics of low temperatures and long-term testing. Chinese engineering companies, especially those that grew out of large chemical holdings, have overcome this barrier. They started by serving the domestic market, where the scale of LNG terminals under construction created an unprecedented testing ground.

Here is a typical example: several years ago we considered the possibility of localizing the production of plate-fin heat exchangers for one of the projects in the Far East. Technically, the proposal from the Chinese contractor looked perfect on paper - all ASME, EN certificates, calculations. But “the devil is in the details”: when we started discussing the logistics of spare parts and adaptation to our specific refrigerants, nuances emerged. Their design was optimized for the stable composition of gas from fields in the South China Sea, while our seasonal fluctuations were more significant. I had to modify it, it took an extra eight months. So leadership in exports is also the ability to flexibly adjust your product to non-standard customer conditions, and not just replicate a successful model.

By the way, about flexibility. This is where it is not giants like CNOOC that stand out, but more highly specialized design institutes. Let's take for exampleChengdu Yizhi Technology Co.(their website isyzkjhx.ru). This is exactly the case when a company created as a design institute under a technology holding company (Chengdu Huaxi Chemical Technology Co.) was able to transfer experience in chemical gas processing to a related area - small and medium-sized LNG plants. Their registered capital of 120 million yuan indicates serious investments in R&D, and not just in production capacity. Their portfolio includes interesting solutions for modular liquefaction plants, which they supply, for example, to filling stations for trucks. This is not a mass market, but a very demanding segment where equipment reliability is critical.

Competition at the critical component level

What is often overlooked when talking about equipment exports is the supply chain. You can assemble an excellent technological module, but if it is based on an imported German-made turboexpander or an American control system, then there is no talk of complete leadership in the value chain. Chinese manufacturers understand this very well and are actively developing their own lines of critical components. For example, piston compressors for small liquefaction plants are already quite competitive in price and, more importantly, in service availability.

However, with large-scale solutions, especially basic compressors for base load plants, the story is more complex. Historical players like GE or Siemens dominate here. China is trying to break through through joint ventures and technology transfer, but the road is long. My experience suggests that customers from the CIS countries or Southeast Asia, when choosing a Chinese supplier for, say, a floating LNG plant (FSRU), often still stipulate the use of a “Western” one. hearts for the liquefaction line. This is not so much a question of quality as of perception of the risks of financing and insuring a project - banks are still more loyal to proven brands.

Nevertheless, progress is evident. At a recent exhibition in Shanghai, I saw an all-Chinese demonstration cascade cycle liquefaction plant, where all key components, including control panels on its own operating system, were locally produced. She worked, I must say, very quietly and stably. The engineers at the stand did not hide the fact that the first prototypes had problems with vibration in certain modes, but they “licked” them. after two years of testing at a pilot plant in Sichuan. This ability to quickly iteratively refine a product based on real data is a huge advantage.

Logistics, service and the “long arm”

Supplying sophisticated equipment is half the battle. It is also necessary to ensure its installation, commissioning and subsequent maintenance. And this is where Chinese exporters have experienced a qualitative leap over the past five years. Previously, you could often encounter a situation: equipment arrived, but commissioning engineers were delayed for a month due to problems with visas or lack of available staff. Now large players are creating service hubs in key regions - in Dubai, Singapore, and increasingly in Istanbul or Minsk to operate in the EAEU markets.

This is a game changer. For example, for the sameChengdu Yizhi Technology Co.the presence of not just a business card website in Russian (yzkjhx.ru), and technical support capable of quickly responding to requests is a direct signal to the market about the seriousness of intentions. In their case, as a design institute with a registered capital of 120 million yuan, it is logical that they do not rely on mass sales, but on complex turnkey projects, where their chemical engineering background from Huaxi Technology gives them an advantage in optimizing the entire technological cycle.

From personal experience: on one project in Central Asia we used Chinese cryogenic storage tanks. When, after a year and a half of operation, a minor leak in the insulation was discovered, a local service engineer (a citizen of Kazakhstan, but hired by a Chinese company) came to the site within three days, diagnosed the problem as a factory defect in the weld on the pipe and arranged for the delivery of a repair kit directly from the factory in two weeks. Everything is under warranty. Ten years ago one could only dream of such a level of service. This is now becoming the standard of expectation.

Market perception and barriers

Despite all the successes, a certain skepticism remains, especially on the part of Western customers and their consultants. The opinion is often heard: “Chinese means cheap and possibly short-lived?” This stereotype is broken by specific projects, but it is tenacious. The barrier can be overcome in two ways: either through an aggressive pricing policy and long-term guarantees (which Chinese companies can afford), or through participation in prestigious international projects as a subcontractor and subsequent transition to the role of a general contractor.

Another subtle point is compliance with standards. Chinese manufacturers now flaunt certificates not only of national GB standards, but also ASME, API, PED, GOST. However, in practice, sometimes “hybridization” occurs: equipment is basically designed to ASME, but some materials or control methods can be replaced with GB equivalents to save money. This is not always bad, but it requires additional expertise from the customer. We once had to reject a batch of shut-off valves for precisely this reason: everything was in order in the certificate, but upon closer examination of the test reports, it turned out that the cyclic fatigue tests were carried out using a method that did not quite correspond to the design specifications for arctic conditions.

Thus, export leadership is a marathon, not a sprint. Chinese companies have already covered a significant part of the distance and have firmly taken positions in the segments of medium and small equipment, modular solutions, as well as reliable suppliers of individual high-tech components. Their strength lies in speed, flexibility and the huge capacity of the domestic market for testing technologies. The weak point is the lack of confidence in their ability to be technology leaders, and not just efficient producers, that has not yet been completely overcome. But judging by the dynamics, especially in light of the activity of such engineering companies asChengdu Yizhi Technology Co., which focus on deep technological development, this barrier will also be overcome. There remains a question of time and the accumulation of a portfolio of reference properties outside Asia.

What's in the bottom line?

So is China a leading exporter? If we measure the total volumes of supplies of “metal” under the brand of LNG projects - definitely yes. If we talk about leadership in the field of the most complex, knowledge-intensive and critical liquefaction technologies - not yet, but the gap is rapidly closing. The market is no longer black and white. There are niches where Chinese solutions are already the de facto standard (for example, equipment for LNG bunkering), and there are segments where they are powerful competitors, benefiting from a better price-functionality ratio.

For us, as practitioners, this means that today we cannot draw up technical specifications simply by copying the specifications of ten years ago. We need to look carefully at the full range of offers, including from China, but do it with open eyes. Ask questions not only about price and timing, but also about the origin of critical components, about real (not paper) references in similar climatic and technological conditions, about the structure of service support.

Ultimately the marketLNG equipmentis becoming increasingly global and competitive. And the fact that the question of China’s leadership is being actively discussed in general is already the best answer to it. Ten years ago it would not have even been asked. Today this is a subject for a detailed, substantive conversation with many “buts” and “if?”, which is a sign of the player’s maturity and seriousness. And in this conversation, the names of not only giants, but also such specialized institutes as the mentioned Chengdu Yizhi Technology are increasingly heard, which speaks of the depth and diversity of the emerging Chinese technological offer.